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On May 14, 2013, Governor Garcia Padilla issued three Executive Orders (“EO”) designed to establish an orderly plan for the gradual implementation of renewable energy sources to reduce the Island’s dependence on fossil fuels and to set forth parameters for establishing new public policy for the responsible use of alternative energy in Puerto Rico.

The first EO, OE-2013-038, applies to all permit applications, consultations or certifications of renewable energy projects (“REP”) filed on or before December 31, 2012. The order directs agencies responsible for evaluating these REP applications to do so on a “priority basis” while ensuring that advancing the development of these REPs is “not inconsistent with the obligation to protect agricultural and sensitive natural [resource] areas.” It also requires that REP integration into PREPA’s power grid be safe and that it “promotes a sustainable economy” for the Island; that these REPs comply with Puerto Rico’s “Environmental Public Policy Law”; and that pertinent government agencies such as the Environmental Quality Board (Junta de Calidad Ambiental) and the Permits Management Bureau (Oficina de Gerencia de Permisos) take whatever measures are necessary to comply with this EO.

The second EO, OE-2013-039, creates an “Autonomous Energy Council” (“AEC”) that will be responsible for the development of a new energy policy that establishes “sustainable energy strategies and practices that lead to energy independence.” Some of the areas that should be explored by the AEC include:

Evaluate strategies, and make recommendations in developing a new energy policy that transcends the change in governmental administrations.

Advise the Governor on specific measures that minimize Puerto Rico’s dependence on external energy resources with a clear and aggressive priority towards local resources (people, solar, wind, water, etc.), and that will facilitate more sensible, responsible and sustainable energy use.

Establishment of committees to enable AEC’s work and deliberations in at least the following areas: energy conservation and efficiency, local energy industry support, sustainable transportation alternatives, fuels, and make recommendations on how best to reform PREPA.

Study of alternatives for the creation of a citizen advisory mechanism on energy matters that creates continuous dialogue with various sectors of society.

Define strategies focused on integrating technologies and practices that take advantage of solar energy, including concepts such as solar communities and optimization of roofs as a resource (i.e., recommend ways to streamline the permitting process for solar projects on residential and small commercial property).

AEC membership will consist of the President of the Planning Board, Secretary of the Department of Energy and Environmental Resources, Secretary of Transportation and Public Works, the Executive Director of PREPA, the Governor’s Principal Advisor on Energy Affairs, and three citizens to be named by the Governor. The citizen representatives on the AEC must have doctorate degrees or extensive experience in areas relating to energy, renewable energy or related areas. The AEC will also be responsible for making recommendations to the Puerto Rico Legislature at the next regular session on how to reform PREPA in ways that are consistent with AEC’s recommended sustainable energy strategies and practices.

The third EO signed by the Governor, OE-2013-040, creates the “Council for Electric Reliability” (“CER”). This body will be responsible for tackling short-term technical challenges concerning the interconnection problems that persist with existing PPAs (“Power Purchase Agreements”) with PREPA that are impacting the progress of bringing these REPs online. A key provision of this EO is the CER’s directive to evaluate the operations of planned and projected renewable energy projects associated with “all energy contracts and agreements signed by PREPA between 2009 and 2012 to determine the impact on the reliability and security of the electrical system of Puerto Rico.” To achieve this, the EO requires that PREPA conduct an electric reliability analysis and present the results to the CER. The EO also grants the CER the discretion to define the scope of review for each contract or agreement under review. This EO also instructs the CER to make recommendations to the Governor regarding the creation of a permanent body to be known as the “Electric Reliability Council of Puerto Rico” (“ERCPR”). The ERCPR will function as a separate unit within PREPA that can deliberate and pass judgment on technical decisions that could impact the safety and reliability of the Island’s electrical system.

The above is a summary of the three new executive orders. The full text of these EOs will no doubt be evaluated by stakeholders in renewable energy projects in the Island. Indeed, entities that entered into PPAs with PREPA between 2009 and 2012 may be surprised to learn that that a new governmental body, the CER, may evaluate their projects. This evaluation process may create additional activity, and costs, not previously contemplated by project planners. These initiatives should be welcomed, but it will take time to implement them and only time will tell whether and how fast they will clear up the REP logjam in Puerto Rico.

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